I recommend number two, but I highly highly recommend you find a clearer image and remove the text. Right now it's difficult to see your lovely art because the image is so blurry!
Here is an example of a thumbnail I think is really strong, from SOLIEL on webtoons.
Note the image is EXTREMELY clear, the colors are bold, and the characters's portraits are made as large as possible to appear clearly in the thumbnail. This is super appealing to readers!